Climate Change

By Delilah L. Clay

Move Over AB 32, Here Comes SB 32! (and AB 197)

Last week, the California Legislature voted to extend the state's ambitious climate change targets while simultaneously pushing a reform bill covering the California Air Resources Board (ARB). Senate Bill 32 (SB 32) establishes a new target for greenhouse gas (GHG) emissions reductions in the state at 40 percent of 1990 levels by 2030. This new target passed exactly one decade after AB 32, which required ARB to work to reduce California's statewide GHG emissions to 1990 levels.

The Legislature paired SB 32 with Assembly Bill 197 (AB 197), a measure increasing legislative oversight over ARB. Many legislators view ARB as being responsive only to the Governor. AB 197 is intended to ensure ARB is more responsive to the Legislature.

Governor Jerry Brown held a press conference to let the world know he would be signing both measures "when they land on my desk." The two bills cleared their respective houses on Wednesday and are heading to the Governor's office for signature. When signed, they will become effective on January 1, 2017.

California originally passed first-of-its-kind legislation on climate change in 2006 through AB 32. That legislation gave broad authority to ARB to develop programs to achieve reduction goals. In recent years, ARB has come under legislative and stakeholder scrutiny for enacting regulatory programs with relatively little legislative input, including the state's Cap-and-Trade program. Critics argue Cap-and-Trade levies a tax without the constitutionally required two-thirds vote of the Legislature. Business and other interests have filed litigation challenging the legality of the program on this basis. Other critics, including many legislators, argue that the benefits of ARB's climate change programs are not shared equally by all Californians and that ARB needs to specifically include disadvantaged communities and communities of color in its planning of programs to address climate change. Speaking for many legislators, Assemblymember Eduardo Garcia said, "I care about the melting ice caps, I care about the polar bears, but I think we need to care about people and put them first when it comes to our climate change policies."

Assemblymember Garcia authored AB 197 to help address his and others' concerns about the ARB's decision-making and priorities. AB 197 requires ARB to "protect the state's most impacted and disadvantaged communities … [and] consider the social costs of the emissions of greenhouse gases" when developing climate change programs. The bill also adds two new legislatively appointed non-voting members to the ARB Board, increasing the Legislature's role in the ARB Board's decisions. (The two new ARB Board members are in addition to a change last year that increased the Board by two legislatively appointed members, breaking what effectively had been a gubernatorial monopoly on appointments to the Board.) Finally, the bill limits ARB Board members to six-year terms. Individuals can serve longer, but only if they are reappointed at the end of their six-year term.

Assembly Speaker Anthony Rendon (D) spoke in support of AB 197 on behalf of the Assembly's Democratic majority, stating, "Our caucus understands that AB 197 is really about reform .… It's really about oversight, it's really about accountability. These are the types of things that we've been talking about as a caucus, as a Legislature, for some time."

Finally, AB 197 will become law with a potential poke at the Cap-and-Trade program. Language added to Section 5 of the bill late in the process requires ARB to target programs toward "direct" emissions reductions. ARB has to determine how this mandate impacts the balance between additional command and control regulation of industry and cars, and its current focus on Cap-and-Trade as an emissions backstop. ARB's interpretation will likely become clear early in 2017 as ARB is expected to readopt the Cap-and-Trade program, the 2030 Scoping Plan and add additional components to the Low Carbon Fuel Standard after the January 1st effective date of the new law. Stay tuned as AB 32 gives way to SB 32 (and AB 197).

About the Author

Delilah Clay is a legislative advisor in the Government and Regulatory practice at Manatt, Phelps & Phillips, LLP. As an attorney and a former legislative staffer, she handles diverse political and regulatory issues for clients related to energy, transportation, and healthcare. Delilah can be reached at (916) 552-2330 or dclay@manatt.com.